Question: My mom is 85. I am 62 and blind. Is it true that elderly parents can transfer all assets to blind children, of any age, and immediately qualify for Medicaid? My mom does not need Medicaid now. I am just thinking ahead. There might be a time when she needs to enter a nursing home or needs nursing assistance. I want her to be able to protect her assets. She lives in a co-op type apartment now. Is there a way to set up something legally so that her apartment and meager savings are protected?
Answer: The rules for Medicaid qualification vary from State to State, so you will need to consult an elder law attorney in your jurisdiction for a definitive answer on how assets may be transferred by a parent to a child without affecting eligibility. However, as a general proposition, the answer to your question is that there are certain “exempt transfers” allowed by law whereby a parent can transfer a residence to a “caretaker child” (one who has resided in the home with the parent for at least two years and has provided actual assistance to the parent with such things as meal preparation and taking the parent to doctor’s appointments), and the law also allows special transfers using trusts for the benefit of blind, disabled, or minor children.
If done correctly, these kinds of transfers do not impact the parent’s Medicaid eligibility. If a transfer does not satisfy all of the applicable rules, however, the transferor may be ineligible for Medicaid benefits for roughly the amount of time that the value of the transferred assets could have paid for nursing home care. In any event, a transfer made more than five years before a Medicaid application is filed by or on behalf of the transfer will not impact the transferor’s Medicaid eligibility.
An additional complicating factor that your question raises is how assets may be transferred for your benefit without affecting your current or future eligibility for means-based programs. That is where “special needs” or “supplemental needs” trusts may come into play. The best time to begin planning for Medicaid qualification is well before there is a need for nursing home services, so your question is timely. Your best move right now would be to consult an elder law attorney in your State for help in navigating the complex rules of Medicaid qualification as well as the rules pertaining to special needs trusts.
Scott A. Makuakane, Esq., CFP
Est8Planning Counsel LLLC
Honolulu, Hawaii 96813